Lant Pritchett

Estimating Wealth Effects Without Expenditure Data—Or Tears: An Application to Educational Enrollments in States of India

Using data from India, we estimate the relationship between household wealth and children’s school enrollment. We proxy wealth by constructing a linear index from asset ownership indicators, using principal-components analysis to derive weights. In Indian data this index is robust to the assets included, and produces internally coherent results. State-level results correspond well to independent data on per capita output and poverty. To validate the method and to show that the asset index predicts enrollments as accurately as expenditures, or more so, we use data sets from Indonesia, Pakistan, and Nepal that contain information on both expenditures and assets. The results show large, variable wealth gaps in children’s enrollment across Indian states. On average a “rich” child is 31 percentage points more likely to be enrolled than a “poor” child, but this gap varies from only 4.6 percentage points in Kerala to 38.2 in Uttar Pradesh and 42.6 in Bihar.

Wealthier is healthier

With cross-country, time series data on health (infant and child mortality, and life expectancy) and per capita income, the authors estimate the effect of income on health. They use instrumental variables estimation to identify the effect of income on health that is structural and causal, isolated from reverse causation (healthier workers are more productive and hence wealthier) or incidental association (some other factor may cause both better health and greater wealth). The long-run income elasticity of infant and child mortality in developing countries lies between 0.2 and 0.4. Using those estimates, they calculate that in 1990 alone, more than half a million child deaths in the developing world could be attributed to poor economic performance in the 1980s.

The impact of public spending on health: does money matter?

We use cross-national data to examine the impact of both public spending on health and non-health factors (economic, educational, cultural) in determining child (under-5) and infant mortality. There are two striking findings. First, the impact of public spending on health is quite small, with a coefficient that is typically both numerically small and statistically insignificant at conventional levels. Independent variation in public spending explains less than one-seventh of 1% of the observed differences in mortality across countries. The estimates imply that for a developing country at average income levels the actual public spending per child death averted is

Desired fertility and the impact of population policies.

50,000-100,000. This stands in marked contrast to the typical range of estimates of the cost effectiveness of medical interventions to avert the largest causes of child mortality in developing countries, which is

Good policy or good luck

10-4000. We outline three possible explanations for this divergence of the actual and apparent potential of public spending. Second, whereas health spending is not a powerful determinant of mortality, 95% of cross-national variation in mortality can be explained by a countrys income per capita, inequality of income distribution, extent of female education, level of ethnic fragmentation, and predominant religion.

Solutions When the Solution is the Problem: Arraying the Disarray in Development

Ninety percent of the differences across countries in total fertility rates are accounted for solely by differences in womens reported desired fertility. Using desired fertility constructed from both retrospective and prospective questions, together with instrumental variables estimation, it is shown this strong result is not affected by either ex-post rationalization of births nor the dependence of desired fertility on contraceptive access or cost. Moreover, despite the obvious role of contraception as a proximate determinant of fertility, the additional effect of contraceptive availability or family planning on fertility is quantitatively small and explains very little cross country variation. These empirical results are consistent with theories in which fertility is determined by parents choices about children within the social, educational, economic, and cultural environment that parents, and especially women, face. They contradict theories that assert a large causal role for expansion of contraception in the reduction of fertility.

What educational production functions really show : a positive theory of education spending

Abstract Much of the new growth literature stresses country characteristics, such as education levels or political stability, as the dominant determinant of growth. However, growth rates are highly unstable over time, with a correlation across decades of 0.1 to 0.3, while country characteristics are stable, with cross-decade correlations of 0.6 to 0.9. Shocks, especially those to terms of trade, play a large role in explaining variance in growth. These findings suggest either that shocks are important relative to country characteristics in determining long-run growth, or that worldwide technological change determines long-run growth while country characteristics determine relative income levels.

Measuring outward orientation in LDCs: Can it be done?

Summary. — An analytic framework for tracing three waves of efforts to provide key public services in developing countries is provided. Persistent (though not universal) failure has been the product of (a) the imperatives of large bureaucracies to discount decisions that are inherently both discretionary and transaction-intensive (and thus less able to be codified and controlled), and (b) good and bad reasons for believing that, because modern bureaucracies underpin rich country prosperity now, simply adopting their institutional form elsewhere is the surest way of facilitating development. Contemporary debates regarding the merits of incorporating more ‘‘participatory’’ approaches into public service delivery are best understood in this context. 2003 Published by Elsevier Ltd.

Better Health Systems for India's Poor: Findings, Analysis, and Options

The accumulated results of empirical studies show that the public sector typically chooses spending on inputs such that the productivity of additional spending on books and instructional materials is 10 to 100 times larger than that of additional spending on teacher inputs (for example, higher wages, small class size). The authors argue that this pervasive and systemic deviation of actual spending from the technical optimum requires a political, not economic or technical, explanation. The evidence is consistent only with a class of positive models in which public spending choices are directly influenced by a desire for higher spending on teacher inputs, over and above their role in producing educational outputs. This desire could be due either to teacher power, or bureaucratic budget-maximizing behavior, or political patronage. The authors conclude by exploring the implications of these positive political models of educational spending behavior for various types of proposed educational reforms (localized control, parental participation, vouchers, and so on) which requires an examination of how the proposed reforms shift the relative powers of the stakeholders in the educational system: students and parents, educators, bureaucrats, and politicians.

The Varieties of Resource Experience: How Natural Resource Export Structures Affect the Political Economy of Economic Growth

Abstract In recent years abundant evidence has been put forth to show that something about a countrys trade policy stance improves economic performance. However, less examined is the question of what exactly that trade policy something that matters for performance is. Examination of the link between various empirical indicators used in the literature to measure trade policy stance reveals that, with minor exceptions, they are pairwise uncorrelated. This finding raises obvious questions about the their reliability in capturing some common aspect of trade policy and the interpretation of the empirical evidence on economic performance.